This Thursday the RBNZ will announce it's next move in the OCR. The current market consensus is for a cut to 4% from 5%, with the likelihood of more thereafter. The structure of NZDUSD is bearish with an extension lower favoured. In holding this bias there is an assumption that the USD will continue to strengthen. That is the only part of the trade that I have a reservation with, as I see the USD index approaching a monthly inverted head a shoulders neckline. It is a somewhat unorthodox inverted head and shoulders, but a reversal pattern never-the-less. I personally favour a failure of the pattern! For those unable to view dollar index data, I will post a USD index chart so that you can make up your own mind!
Returning to NZDUSD, I would suggest getting short on pullbacks towards .5544 with a stop over .5651/.5760 depending on your risk tolerance. Initial target lies on the bear channel support close to the 100% extension of .6080-.5272 from .5544 at .4736. A push out of the channel would ultimately target .4237 the 161.8% extension of the same initial move down.
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